In this article, we'll cover the basics of group health insurance for small businesses. But before we discuss that topic, we have to ask, "How small is 'small'?" The exact number varies from insurer to insurer, and perhaps from state to state, but in most cases a company counts as a small business if it has 1 to 100 employees.
In some states, you count as a small business even if you are self-employed and have no employees. If this applies to you, check with your state’s Department of Insurance or any qualified insurance agent to find out if you qualify for a small business group plan (see Insurance Agents: What's The Point? to learn the benefits of working with an agent). If you do, it’s worth your while to compare costs and benefits offered in individual versus small business group plans.
Assess Your Employees' Needs
You should always try to find a plan that meets your employees' actual needs. One way to ensure that you do is by comparing a few plans and sharing a list of the available benefits with your employees. This will enable to them to discuss their insurance needs with you. Be cautious with th way you approach this, because it is illegal under federal law to ask employees about their individual medical histories, but you can ask them what kind of benefits they're most interested in.
There are a variety of policy features that your employees might hold especially valuable, including high level of coverage for catastrophic illness or injury, low copayments for regular visits to doctors or clinics, prescription drugs, low calendar-year out-of-pocket maximum payments, maternity care, acupuncture, mental health care, and vision and dental benefits (for more considerations, see 10 Tips to Choosing the Right Health Insurance Policy).
You may be able to draw some conclusions about the things that matter most to your employees. For example, if all of them are women over the age of 40 and men, maternity care is not likely to be high on their list of priorities. And if a number of them visit doctors frequently, they might be willing to pay higher premiums in order to have lower copayments and deductibles (see All The Ways You Pay for an explanation of these and related terms). But to provide them with adequate healthcare insurance—and to avoid wasting money on irrelevant coverage—avoid making too many assumptions and give your employees the opportunity to discuss their needs with you.
Keep in mind, also, that some of your employees might already be covered by their spouses' insurance plans
and will not be interested in acquiring insurance at all, especially if
they will be paying part of the premiums.
In most states, employers are legally required to pay a minimum of 50% of the monthly premiums and can pay all the way up to 100% if they wish. As the employer, the decision is up to you, as long as you meet the state minimum (check with your state’s Department of Insurance or a qualified insurance agent to find out what your state's minimum is).
If you are not going to offer your employees a 100% paid plan, then your discussions with them regarding what kinds of benefits to get will have to include consideration of what it will cost them. The greater the benefits, the more expensive the policy. You will also have to come to a decision about when to incur the higher costs—every month or only when they get sick? Generally, plans with higher monthly premiums have lower deductibles or lower copayments. This means that you and your employees will pay more each month but less when they are sick or injured.
Being turned down for a pre-existing condition is a common worry. But, fear not, your business cannot be turned down by an insurer due to you or any of your employees having a pre-existing condition. In fact, under Obamacare, this is now true even for individual policies.
Most insurance plans are offered by large insurance companies and these companies often have preferred providers. These preferred providers are the doctors or clinics that are part of the insurance company’s network and accept the agreed-upon limit for any particular treatment as full payment. So, if you insurer will pay, let’s say, up to $50 for a routine visit, the preferred providers in the company’s network will accept this $50 as full payment for routine visits. If you have a copay, however, you will be responsible for the amount of the copay, so with a $10 copay you would pay $10, the insurer would pay $40, and the provider would accept this $50 as full payment.
You can still use providers outside of the network, but they will not be limited to the $50 fee and you will be responsible for paying the any amount that exceeds that limit. If, for instance, they charge you $70 for the visit and you have a $10 copay but the insurer's limit for this service is $50, the insurer would pay $40 and you would be required to pay the remaining $30 (the $10 copay plus the $20 over the $50 service limit).
You, or some of your employees, might have pre-existing relationships with certain doctors or clinics that you might want to maintain. When comparing policies, note which doctors or clinics are members of the insurance company's network, if they have one.
Dealing Through an Agent or Insurer?
Under federal law, the cost for health insurance purchased through a licensed agent is exactly the same as that purchased directly from an insurer. One advantage of dealing with an agent is that they will be familiar with the territory and will be able to give you comparative evaluations of various insurers with respect to their services, deductibles and copayments, and much more.
I recommend asking around and doing a little internet research about agents (to guide your search, consult 5 Questions to Ask Before Choosing an Insurance Agent). A skilled, experienced agent is a valuable ally in your search for a good insurance policy. Note, however, that some agents deal exclusively with single companies.
Your plan will typically be a one-year agreement. At the end of the first year, you will enter what is called "open enrollment." At this stage, you are free to review the insurance you have purchased and make changes in the policy if you want.
Be sure to take advantage of this opportunity every year. Ask your employees whether the plan is working for them. Do they feel there should be changes in coverage? Do you? If you find that certain benefits you have paid for are going unused, terminate them. If other needs have arisen, consider covering them.
Do Your Homework
A health insurance policy is an important benefit for you and your employees. Be sure you take some time and do the research required to ensure you get the policy that best suits you and your employees' needs.